Happen[In]Crypto brings you news from April 18 to 24, from IRS and cybersecurity attacks to Russia, ETFs, and Ross Ulbricht’s $3 billion worth of bitcoins to the federal government.
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$182 million “flash loan” attack
The crypto sector had a very eventful week that was marred by reports of exploits and scams. Beanstalk Farms suffered an exploit that led to a loss of $182 million through the use of two catastrophic governance proposals and a flash loan attack.
Furthermore, Australia’s largest lender, Commonwealth Bank, raised concerns over a story that claimed to have partnered with a cryptocurrency trading platform. The fake story was well received on social media, leading the bank to issue its disclaimer that the story was “completely false and untrue”.
iOS users appear to be the target of a new phishing scheme targeting their iCloud backups for MetaMask seed phrases and other pertinent details. Metamask warned users to keep their guard up and issued tips to protect themselves after one user lost around $650,000.
IRS and crypto reporting
Individuals will still be required to report details of their cryptocurrency holdings to the Internal Revenue Service (IRS) for 2021. The revised tax form issued by the IRS explicitly provides for taxpayers to indicate whether or not they hold cryptocurrencies, beginning with the form at the top.
Joe Biden’s infrastructure bill, which will take effect in 2023, would make it mandatory for individuals to report any transaction over $10,000 in cryptocurrency to the IRS. The current tax form under the 2023 bill has nevertheless created a bit of confusion about whether consumers are required to report anything to the IRS.
With tax season still underway, Sen. Elizabeth Warren has fired shots at the makers of TurboTax software over claims they defrauded American taxpayers. Warren accused the firm of using deceptive advertisements and noted an “ongoing pattern of hiring former regulators to protect Turbotex products”.
Russian Bank Association and non-custodial wallet
Russia’s invasion of Ukraine has resulted in several sanctions on the country and firms have severed ties with the country. Earlier in the week, cryptocurrency exchange EXMO announced that its services would no longer be available to Russian and Belarusian customers.
The Russian Bank Association wants to ban the use of non-custodial wallets and is proposing that citizens turn to third-party custodians. Insiders report that the move is a ploy to create a “closed-loop” of the cryptocurrency and prevent capital outflows.
As part of efforts to take control of digital currencies and mitigate the shock of sanctions, the Russian central bank has announced that it will launch a Central Bank Digital Currency (CBDC) next year. The bank’s governor, Elvira Nabiullina, said that “the digital ruble is among the priority projects”, and pilot transactions can be expected in 2023.
On Friday, a Reuters report claimed that Binance allegedly complied with orders from a Russian intelligence agency to submit business data of opposition leader Alexei Navalny. However, Binance took to the stage, dismissing Reuters as providing a “false narrative” and calling all of its claims “clearly false”. The world’s largest crypto exchange says that “active engagement with the Russian government has now ceased due to the conflict.”
EU, IMF, and KFTC Laws
There were interesting reports this week on crypto regulations globally with European crypto firms urging the European Union (EU) to reconsider the law. More than 40 firms signed a letter to government officials on the grounds that it would “put every digital asset owner at risk”
In addition, the International Monetary Fund (IMF) has called for more regulations for DeFi. The IMF revealed this in its latest Global Financial Stability Report, warning of the growing dangers that the new financial market poses to the global economy.
In the Far East, South Korean regulators are considering the idea of reclassifying a crypto exchange, Upbit, as part of a larger “non-financial business”. The Korea Fair Trade Commission (KFTC) notes that the new classification will mean that stricter regulations will apply to the exchange, pursuant to the provisions of the Monopoly Regulation and Fair Trade Act.
Crypto exchange-traded funds (ETFs) are riding a mighty wave around the world with stellar reports this week. In Australia, the first bitcoin ETF is set to go live as Cosmos Asset Management, 21Shares and ETF Securities face-to-face.
Fidelity Investments, a leading player in ETFs, has revealed its new Metaverse Fund. The Fidelity Metaverse ETF will track and invest in firms that build around the Metaverse. According to a Fidelity executive, the new leap to the new frontier aims to provide young investors with exposure to a “familiar investment vehicle.”
Silk Road founder Ross Ulbricht satisfies US government debt
The embattled founder of Silk Road, Ross Ulbricht, is about to forfeit his claim to bitcoins found in 2020.
According to court documents, the Justice Department and Ulbricht came to an agreement where the net proceeds from the sale of Silk Road would be credited towards any payment of the money judgment. Ultimately, Ulbricht has agreed to forfeit any claims to the $3 billion worth of bitcoin, which satisfies its entire debt to the US government.
More than 69,370 bitcoins were seized from a hacker, which is on record as the largest ever crypto seizure by the US Department of Justice. The seizure brings Ulbricht one step closer to his “freedom” since imprisonment in 2013.
Several campaigns including auctioning of his NFT collection have been launched to secure his freedom.
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